Where fraud and financial crime compliance are headed

My previous post highlighted the concerns of compliance professionals as they struggle amidst a climate filled with change. Here, I’ll explore some of the themes we anticipate for the future of fraud and financial crime.

The future of fraud and financial crime compliance:

Governance: Senior management should remain involved in evaluating risk and providing effective challenge. To perform effectively, these leaders should have access to good information that uses real-time data and support from the second line to understand the emerging risks and digital environment.

Strategy alignment: Financial crime compliance strategies are expected to drive proactive measures to fight fraud and financial crime. These should be aligned with the firm-wide strategy and tailored to business goals reinforced by governance best-practices and a culture of good behaviour.

Product design: Financial crime compliance staff should be enablers and proactively support the business. For example, participating in product design meetings throughout the entire process would allow the financial crime compliance team to understand what is being proposed, and the product features they can influence to help facilitate putting into place the right controlsfrom the beginning.

Collaboration and breaking silos: The future model should allow staff to work collaboratively across all financial crime disciplines (anti-money laundering, sanctions, anti-bribery, and corruption and fraud) as well as across all business geographies.

Adaptable controls: A mix of proactive and reactive controls helps provide a robust framework to protect the bank from illicit activities, yet is flexible enough for the business to thrive in a digital world.

Personalisation: Firms should consider how they segment customers and what customer information to use to tailor controls.

Smart real time data and IT: Powered by IT, cloud-based financial crime compliance solutions help workers to spend more time on value-added tasks rather than manual compliance entry creating efficiencies and reducing the cost base. Harnessing real-time information and external data, will aid operational staff to complete checks and enable management to make decisions from advanced fraud and money laundering risk models. Automated processes and technology should help automate decision making and facilitate sharing of static data.

Right people: Banks should have a financial crime compliance workforce that is technology literate and passionate about identifying emerging risks and trends, rather than complying with the status quo. Optimizing the level of skilled and unskilled staff is in our view key with compliance personnel who embrace digital and are willing to work through systems and technology highly prized.

Cost: Optimising processes and utilising technology to reduce overhead is critical in our view as the competitive landscape changes and banks are less able to operate with higher costs. Firms are encouraged to find the right balance of skilled to unskilled labour to be efficient and exploit analytics and use ”robots” to automate processes wherever possible. The pressure to do more with less will continue.

Conclusion: Seize the opportunity

Digital is expect to continue to disrupt financial services, and the market is likely to become increasingly competitive. Firms are under increasing pressure to innovate and to keep their customers happy. The regulatory focus will not diminish, and neither will the desire for criminals to commit financial crime.

A future financial crime compliance function should be proactive and work with the business to manage risks before they crystallise, at a rapid pace and in an efficient and effective manner. They should also embrace digital and act as an enabler, helping to manage financial crime risk and support the business with its strategy. In an ever-changing and increasingly competitive world, the financial crime compliance function could be key—not just to the firm’s future survival, but to its future success.

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